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US President Donald Trump has blocked a planned takeover of chipmaker Qualcomm by Singapore-based rival Broadcom on grounds of national security.

President Donald Trump issued an executive order Monday blocking Broadcom Ltd from pursuing its hostile takeover of Qualcomm Inc, scuttling a $117 billion deal that had been scrutinized by a secretive panel over the tie-up's threat to United States national security.

USA president Donald Trump issued Qualcomm a Presidential Order, prohibiting the Broadcom takeover. Besides banning the deal, it also disqualifies all of Broadcom's director nominees from being elected as Qualcomm's directors. The bids were also the subject of an investigation by the US Committee on Foreign Investment in the United States (CFIUS), and the investigators expressed concern about Broadcom's potential to stifle Qualcomm's research and investment in 5G technology. Bloomberg argues that Trump was concerned that a Broadcom takeover of Qualcomm would have allowed the Singapore-based company to weaken Qualcomm and therefore strengthen Huawei.

The proposal, according to Qualcomm's board of directors, didn't ascribe any value to Qualcomm's NXP acquisition in 2016, or the expected resolution of licensing disputes and the greater opportunity in the 5G market.

The CFIUS discovered that if Broadcom bought Qualcomm, it would benefit Chinese competitors attempting to produce 5G wireless technology and weaken U.S.'s ability to compete against Chinese rivals like Huawei. Qualcomm didn't respond to requests for comment. On Twitter this morning, California Rep. Susan Davis (D, 53rd District) said the decision was "good for San Diego, our regional economy, and national security". Lawmakers in Washington are moving forward with legislation that would expand the universe of overseas investments that require national security approval from the Committee on Foreign Investment in the U.S. The Trump administration has endorsed the bill, which Senator John Cornyn, a Texas Republican, proposed with China in mind.

President Trump's executive order puts an end to Broadcom's unsolicited pursuit of Qualcomm. The proposed concerns being, Chins getting the upper hand in mobile communications.

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Donald Trump just stepped into the global 5G "arms race".

Over the next couple of days, Broadcom bent over backwards to please CFIUS and other critics of the deal.

The White House was forced a few days ago to postpone the general meeting of shareholders of the United States semiconductor company to torpedo the maneuver. Both companies are dubbed as big players in the chip manufacturing industry, however, Qualcomm's business model also includes telecom equipment. However, it is not clear what rules Broadcom would have to follow if it goes ahead with announced plans to move its headquarters to the United States. So it's full stop, with no further explanation of exactly how Broadcom owning Qualcomm would pose a national security risk beyond CFIUS's concerns, which included that a "weakening of Qualcomm's position would leave an opening for China to expand its influence on the 5G standard-setting process".

"I get the concerns about China taking our intellectual property etc. but I think they are misplaced in this specific case", Rasgon said. It would also have been the biggest takeover the technology sector had ever seen.

It is a highly unusual move by a President.


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